Michiel Willems LLM MA is based in central London as an international journalist in broadcast and print. With global study and work experience and an open mind, he works as a freelance writer, radio reporter and full time journalist. He has developed an interest in the stories behind the news, the facts behind the stories and the people behind the facts.
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Tuesday, 26 April 2011

LONDON - Europe’s business community has responded negatively to a number of amendments to the Consumer Rights Directive (CRD), which were approved by the European Parliament (EP) on 24 March.

“[This is] a costly vote for businesses, and it shows that Members of the European Parliament (MEPs) have lost sight of one of the key objectives [of the CRD], which was to cut legal costs for businesses wishing to sell cross-border,” said Arnaldo Abruzzini, Secretary General of Eurochambers, representing around 1,200 European Chambers of Commerce.

Andrew McClelland, Director of Operations and Regulatory Affairs at the Interactive Media in Retail Group (IMRG), believes that “some of these amendments will have a terrible effect on the growth of e-commerce”.

Although a final vote has been postponed until an agreement with the Council of Ministers - representing the Member States (MS) - is reached, the amendments are ‘to protect online shoppers and boost consumer confidence in buying in other MS’ and ‘will be the basis on which MEPs will try to reach an agreement with MS,’ the EP said in a statement.

“The new EP position is bad news for businesses,” explains Nick Johnson, Partner at Osborne Clarke. “[Businesses] will have to incur significant costs, but with little benefit in return.”

New rulesUnder the new rules, goods must be delivered within 30 days and consumers will have a 14-day EU-wide withdrawal period in which they may change their minds. The newly introduced Article 17 has especially angered many e-businesses, since it will make retailers liable for covering the cost of the return of a product valued over €40 after a consumer exercises their right to withdraw.

‘This places an unfair burden on e-retailers,’ the IMRG said in a statement. ‘For those sectors that have high return rates and low product costs, the potential losses could be catastrophic.’

Rohan Massey, Partner at McDermott Will & Emery, is not surprised many retailers have responded negatively since “the obligations [are] being placed on traders”. He predicts products are going to be more expensive since “traders will look to offset costs by increasing prices”.

Johnson agrees with this: “Of course, consumers will ultimately pay for all of this. Prices [will] go up. That, in turn, means EU businesses lose out to competitors in the US, Asia and elsewhere - hardly a recipe for job creation and economic growth in Europe.”

London - The European banking and payments industry is increasingly objecting to proposals by the European Commission (EC) to regulate the European payments landscape. The European Payments Council (EPC), representing the European banking industry in relation to payments, has heavily criticised the EC’s plans. On 15 March, EPC’s Chairman Gerard Hartsink said: “It is not appropriate for the EC to take on the role of a de facto scheme manager and standard setter in the area of payments”. Hartsink was referring to proposals set out by the EC in December for EU-wide end-dates for the migration of national credit transfers and direct debits to Single European Payment Area (SEPA) instruments. The EC’s plans also include a set of common standards and technical requirements that would be mandatory for all bank account payments in the Eurozone. Hartsink said about the ‘interference’ of the EC: “It is simply not warranted or efficient that standards should be defined and evolved by law”. “There are improvements [to the EC’s proposals] that we would want to see,” explained Michelle Whiteman, of the UK Payments Council. “We wish that the scope is set precisely”, while the European Banking Association expressed its ‘concerns’ on 24 February, in a letter to the European Commission, which pointed out ‘negative, unintended consequences’. “I think the EPC has a point,” said Dave Birch, Consultant at Hyperion. “If the EC wants to take over standard-setting, then what was the point of the last decade?” In December, the EC said it made the proposals ‘because self-regulation by the banks had failed, with minimal take-up of new payment instruments evident’. Birch believes “the EC should focus on competition issues [instead], because these are the way to exploit new technology to make payments services better". The EPC, backed by most European banks, remarked in its Annual Activity Report: ‘Self-regulation by banks provides the most efficient means to create innovative, effective and secure payment systems’. Hartsink stressed that ‘self-regulation represents the established approach in all national banking communities’. John Worthy, Partner at Field Fisher Waterhouse, believes that although “banks will be keen to avoid extra regulatory intervention on SEPA”, the EPC “may need to work hard to make the case, given the perceived weaknesses of self-regulation resulting from the financial crisis”.